Free and single

Many cases in the ECJ are of public interest, but few are interesting to the public. Joined cases C-403/08 and C-429/08 Football Association Premier League Ltd (4 October 2011; see www.solicitorsjournal.com, 4 October 2011) managed to be both. The issue was whether the Premier League could prevent UK businesses from using a foreign satellite television subscription to show Premier League football matches at a lower cost than that charged by the 'official' UK satellite provider, BSkyB. The ECJ held that they could not.

Premier League matches are not of equal interest to viewers in every EU country '“ an English viewer will pay more to watch a match than, say, a Greek viewer. So the Premier League would ideally maximise its income by charging more to English subscribers than to Greek ones. Such price discrimination, whereby the seller tries to extract the maximum that each consumer is willing to pay '“ charging more to those who value the thing that is being sold '“ is perfectly rational.

The old technology of terrestrial broadcasting made it simple: a Greek transmitter would reach mostly Greek viewers, and an English transmitter would reach mostly English viewers. There was a correlation of broadcaster and audience, which made price discrimination simple: charge an English broadcaster more than a Greek one. Not so with satellites. All that stands in the way of viewing any broadcaster's transmission is possession of the right decoding equipment and subscription, and English viewers could therefore buy a foreign decoder and subscription.

To prevent this, the Premier League required foreign broadcasters to ensure that no decoding device was knowingly authorised to be used outside their own territory. It thereby attempted to re-impose, by means of legal obligations, the sort of territorial market division that had been 'natural' for terrestrial broadcasting, but which the technology no longer required. The essential question before the ECJ was whether that was effective.

Domestic v commercial

The cases also involved a second form of price discrimination: between domestic users and commercial users. If broadcasters and right-holders authorised transmission and decoding for domestic consumers, could commercial users buy a domestic decoder box and use it to show broadcasts to the public in commercial premises?

The detail of the case is immensely complicated '“ the judgment runs to 207 paragraphs '“ not made any easier by a complex 'exam paper' form of reference and by a very laconic account of the facts by the ECJ, which make it difficult for an outsider to understand how the various issues interrelated. But, stripped of the technical complexity, the ECJ's judgment seems to come down to two essential points. For the ECJ, geographical price discrimination is suspect, but other forms of price discrimination are acceptable.

The ECJ's antipathy to geographic price discrimination emerged in the way that it dealt with three issues: whether a decoding device that had been obtained by misrepresentation thereby became 'illicit' under EU legislation (it did not); whether it is a justifiable restriction on the freedom to provide services to adopt national legislation designed to prevent the reception of foreign satellite broadcasts in order to assist right-holders in dividing the market geographically (it is not); and whether, as between the broadcaster and the right-holder, attempts to limit the broadcaster's licence to a single territory infringe competition law (they do).

The EU market is a single market, and EU law has traditionally been hostile not just to public attempts to subdivide it, but to private attempts to do so and to invoke national law in support. The ECJ did not think that legally watertight territorial restrictions are reasonably required by the right-holder. It would be sufficient, to enable a fair return, that the right-holder could find out how far a particular broadcaster's output was likely to or did reach various different audiences, and price accordingly. Although it might be simpler, for the right-holder and broadcasters, to adopt a rigid territorial approach, compartmentalising markets, it was not necessary for fair remuneration.

However, when it came to discrimination between domestic and commercial use, the ECJ was much more sympathetic to right-holders.

The ECJ held that showing games in business premises constituted a 'communication to the public', so that the right-holder's permission was required. Moreover, a right-holder who licensed broadcast only for domestic purposes was not thereby agreeing to permit commercial communication. That constituted communication to a 'new' (perhaps better, different) audience than that which had been intended. In other words, a right-holder can legitimately seek to impose restrictions on 'downstream' use of the rights, which is designed to distinguish between different categories of use.

In purely functional terms, geographical price discrimination and 'use-based' price discrimination serve similar ends. An English resident will pay more to watch Arsenal play Chelsea than a Greek national, and a pub will pay more to show the game than an individual. The right-holder seeks in each case a way of extracting the maximum return. But, from the point of view of EU law, they are different: one is an obstacle to the single market, and the other an acceptable use of that market to extract a fair commercial return. How much practical benefit consumers will get from this result is not clear (there are various ways the Premier League might try to work around it, such as by scheduling broadcasts outside the UK later than the UK broadcast), but the case is a reminder of the continuing importance of the single market as an ideal in EU law.